U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(MARK ONE)
|X| Quarterly Report Pursuant to Section 13 or 15(d) of Securities Exchange
Act of 1934
For the quarterly period ended SEPTEMBER 30, 2000
|_| Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from _______ to _______.
Commission File No. 000-29689
USWEBAUCTIONS, INC.
-------------------
(Name of Small Business Issuer in Its Charter)
<TABLE>
<CAPTION>
<S> <C>
FLORIDA 65-0986953
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(State or Other Jurisdiction of Incorporation (I.R.S. Employer Identification No.)
or Organization)
22 SOUTH LINKS AVENUE, STE. 204, SARASOTA, FLORIDA 34236
-------------------------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
</TABLE>
(941) 330-8051
--------------
(Issuer's Telephone Number, Including Area Code)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months, and (2) has
been subject to such filing requirements for the past 90 days. Yes |X| No |_|
There were 9,860,000 shares of Common Stock outstanding as of November 13,
2000.
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
USWEBAUCTIONS, INC.
(FORMERLY AUGUST PROJECT I CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 AND DECEMBER 31, 1999
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USWEBAUCTIONS, INC.
(Formerly August Project I Corporation)
(A Development Stage Company)
Balance Sheets
<TABLE>
<CAPTION>
ASSETS
------
September 30, December 31,
2000 1999
------------- ------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash $ 2,349 $ --
------------- ------------
Total Current Assets 2,349 --
------------- ------------
OTHER ASSETS
Note receivable - related party - net (Note 3) 616,363 --
------------- ------------
Total Other Assets 616,363 --
------------- ------------
TOTAL ASSETS $ 618,712 $ --
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable $ 62,067 $ --
------------- ------------
Total Current Liabilities 62,067 --
------------- ------------
STOCKHOLDERS' EQUITY
Common stock authorized: 50,000,000 common shares at
$0.001 par value; 9,860,000 and 5,000,000 shares
issued and outstanding 9,860 5,000
Capital in excess of par value 1,147,140 (3,000)
Stock subscription receivable (500,000) -
Deficit accumulated during the development stage (100,355) (2,000)
------------- ------------
Total Stockholders' Equity 556,645 --
------------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 618,712 $ --
============= ============
</TABLE>
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USWEBAUCTIONS, INC.
(Formerly August Project I Corporation)
(A Development Stage Company)
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
From Inception
For the For the on July 10,
Three Months Ended Nine Months Ended 1997 Through
September 30, September 30, September 30,
-------------------------------- --------------------------- --------------
2000 1999 2000 1999 2000
------------- --------------- ------------ ----------- --------------
<S> <C> <C> <C> <C> <C>
REVENUES $ -- $ -- $ -- $ -- $ --
EXPENSES
General and administrative 10,913 -- 108,741 -- 110,741
Total Expenses 10,913 -- 108,741 -- 110,741
OTHER (EXPENSE) INCOME
Interest income 9,806 -- 10,386 -- 10,386
Total Other (Expense) Income 9,806 -- 10,386 -- 10,386
NET LOSS $ (1,107) $ -- $ (98,355) $ -- $ (100,355)
============= ============== =========== ========== =============
BASIC LOSS PER SHARE $ (0.00) $ (0.00) $ (0.02) $ (0.00)
============= ============== =========== ==========
WEIGHTED AVERAGE NUMBER OF SHARES 6,974,035 5,000,000 6,309,927 5,000,000
============= ============== =========== ==========
</TABLE>
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USWEBAUCTIONS, INC.
(Formerly August Project I Corporation)
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
From Inception on July 10, 1997 Through September 30, 2000
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional Stock During the
------------------------------ Paid-in Subscription Development
Shares Amount Capital Receivable Stage
--------------- ------------ ---------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Balance at inception on July 10, 1997
-- $ -- $ -- $ -- $ --
Common stock issued for services
5,000,000 5,000 (3,000) -- --
Net loss from inception on July 10,
1997 to December 31, 1997 -- -- -- -- (2,000)
------------ ----------- ---------- ------------ -----------
Balance, December 31, 1997 5,000,000 5,000 (3,000) -- (2,000)
Net Loss for the year ended
December 31, 1998 -- -- -- -- --
------------ ----------- ---------- ------------ -----------
Balance, December 31, 1998 5,000,000 5,000 (3,000) (2,000)
Net loss for the year ended
December 31, 1999 -- -- -- -- --
------------ ----------- ---------- ------------ -----------
Balance, December 31, 1999 5,000,000 5,000 (3,000) -- (2,000)
Common stock issued for cash
at $0.25 per share (unaudited) 3,060,000 3,060 761,940 (500,000) --
Common stock issued for cash at $0.25 per 1,800,000 1,800 448,200 -- --
Stock offering costs (unaudited) -- -- (60,000) -- --
Net loss for the nine months ended
September 30, 2000 (unaudited) -- -- -- -- (98,355)
------------ ----------- ---------- ------------ -----------
Balance, September 30, 2000 (unaudited) 9,860,000 $ 9,860 $ 1,147,140 $ (500,000) $ (100,355)
</TABLE>
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USWEBAUCTIONS, INC.
(Formerly August Project I Corporation)
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
From Inception on
For the For the July 10, 1997
Three Months Ended Nine Months Ended Through
September 30, September 30, September 30,
-------------------- --------------------- -----------------
2000 1999 2000 1999 2000
---------- -------- ---------- --------- -----------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (1,107) $ -- $ (98,355) $ -- $ (100,355)
Adjustments to reconcile net loss to net
cash used by operating activities:
Issuance of stock for services -- -- -- -- 2,000
Changes in operating assets and
liability accounts:
(Increase) decrease in notes
receivable - related party (437,833) -- (616,363) -- (616,363)
Increase (decrease) in accounts payable 20,330 -- 62,067 -- 62,067
---------- -------- ---------- --------- ---------------
Net Cash (Used) by Operating Activities (418,610) -- (652,651) -- (652,651)
---------- -------- ---------- --------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES -- -- -- -- --
---------- -------- ---------- --------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES -- -- --
Stock offering costs (60,000) -- (60,000) -- (60,000)
Issuance of stock for cash 450,000 -- 715,000 -- 715,000
Net Cash Provided by Financing
Activities 390,000 -- 655,000 -- 655,000
---------- -------- ---------- --------- ---------------
NET INCREASE (DECREASE) IN CASH (28,610) -- 2,349 -- 2,349
CASH AT BEGINNING OF PERIOD 30,959 -- -- -- --
---------- -------- ---------- --------- ---------------
CASH AT END OF PERIOD $ 2,349 $ -- $ 2,349 $ -- $ 2,349
========== ======== ========== ========= ===============
CASH PAYMENTS FOR:
Income taxes $ -- $ -- $ -- $ -- $ --
Interest $ -- $ -- $ -- $ -- $ --
SCHEDULE OF NON-CASH
FINANCING ACTIVITIES:
Common stock issued for services $ -- $ -- $ -- $ -- $ --
Stock subscription receivable $ -- $ -- $ 500,000 $ -- $ 500,000
</TABLE>
6
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USWEBAUCTIONS, INC.
(Formerly August Project I Corporation)
(A Development Stage Company)
Notes to Financial Statements
September 30, 2000 and December 31, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Organization
August Project I Corporation (the "Company") was organized July
10, 1997 under the laws of the State of Florida for the purpose of
engaging in any lawful activity. On April 20, 2000, the Company's
name was changed to USWEBAUCTIONS, INC. in connection with the
failed acquisition of USWEBAUCTIONS, INC, a private company. The
Company has had no significant operations since inception and is
considered a development stage company in accordance with
Statement of Financial Accounting Standards No.7.
b. Provision for Taxes
At September 30, 2000, the Company had net operating loss
carryforwards of approximately $100,000 that may be offset against
future taxable income through 2019. No tax benefit has been
reported in the financial statements, because the Company believes
there is a 50% or greater chance the carryforwards will expire
unused. Accordingly, the potential tax benefits of the net
operating loss carryforwards are offset by a valuation allowance
of the same amount.
c. Accounting Method
The financial statements are prepared using the accrual method of
accounting. The Company has elected a calendar year end.
d. Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
e. Cash and Cash Equivalents
The Company considers all highly liquid investments with a
maturity of three months or less when purchased to be cash
equivalents.
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USWEBAUCTIONS, INC.
(Formerly August Project I Corporation)
(A Development Stage Company)
Notes to Financial Statements
September 30, 2000 and December 31, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
f. Basic Loss Per Share
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For the Nine Months Ended
September 30, 2000
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<S> <C> <C>
Loss Shares Per Share
(Numerator) (Denominator) Amount
------------------------- ------------------------------- -----------------------
$ (98,355) 6,309,927 $ (0.02)
========================= =============================== ========================
For the Nine Months Ended
September 30, 1999
--------------------------------------------------------------------------------------
Loss Shares Per Share
(Numerator) (Denominator) Amount
------------------------- ------------------------------- -----------------------
$ -- 5,000,000 $ (0.00)
========================= =============================== ========================
</TABLE>
Basic loss per share has been calculated based on the weighted
average number of shares of common stock outstanding during the
period.
g. Revenue Recognition
The Company currently has no source of revenues. Revenue
recognition policies will be determined when principal operations
begin.
h. Unaudited Financial Statements
The accompanying unaudited financial statements include all of the
adjustments which, in the opinion of management, are necessary for
a fair presentation. Such adjustments are of a normal recurring
nature.
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using generally
accepted accounting principles applicable to a going concern which
contemplates the realization of assets and liquidation of
liabilities in the normal course of business. The Company has not
established revenues sufficient to cover its operating costs and
allow it to continue as a going concern. Management intends to
raise additional funds through private placements and to seek a
merger with an existing operating company. In the interim,
management has committed to meeting the Company's minimal
operating expenses.
8
<PAGE>
USWEBAUCTIONS, INC.
(Formerly August Project I Corporation)
(A Development Stage Company)
Notes to Financial Statements
September 30, 2000 and December 31, 1999
NOTE 3 - RELATED PARTY TRANSACTION
The Company has loaned related parties $616,363, bearing interest
at 10%, unsecured and due on demand. This amount is shown net of
an allowance for doubtful accounts of $35,325 which represents
amounts advanced to USWEBAUCTIONS, INC., a private company in
connection with the failed reverse merger, and accrued interest of
$10,386.
NOTE 4 - CANCELLATION OF PROPOSED MERGER
The Company's merger with USWEBAUCTIONS, INC. was rescinded. All
of the shares issued have been canceled and returned.
NOTE 5 - STOCK TRANSACTIONS
On June 10, 2000, the Company issued 3,060,000 shares of common
stock valued at $0.25 per share for cash. At September 30, 2000,
the Company has received $261,940 and has a stock subscription
receivable for $500,000.
On September 21, 2000, the Company issued 1,800,000 shares of
common stock valued at $0.25 per share for cash. The Company
received $450,000 and paid stock offering costs of $60,000.
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ITEM 2. MANAGEMENT'S PLAN OF OPERATION AND DISCUSSION AND ANALYSIS.
-----------------------------------------------------------
INTRODUCTORY STATEMENTS
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS. THIS FILING CONTAINS
FORWARD-LOOKING STATEMENTS, INCLUDING STATEMENTS REGARDING, AMONG OTHER THINGS,
(A) OUR COMPANY'S PROJECTED SALES AND PROFITABILITY, (B) OUR COMPANY'S BUSINESS
PLAN AND GROWTH STRATEGIES, (C) OUR COMPANY'S FUTURE FINANCING PLANS AND (D) OUR
COMPANY'S ANTICIPATED NEEDS FOR WORKING CAPITAL. IN ADDITION, WHEN USED IN THIS
FILING, THE WORDS "BELIEVES," "ANTICIPATES," "INTENDS," "IN ANTICIPATION OF,"
"EXPECTS," AND SIMILAR WORDS ARE INTENDED TO IDENTIFY FORWARD-LOOKING
STATEMENTS. THESE FORWARD-LOOKING STATEMENTS ARE BASED LARGELY ON OUR COMPANY'S
EXPECTATIONS AND ARE SUBJECT TO A NUMBER OF RISKS AND UNCERTAINTIES, MANY OF
WHICH ARE BEYOND OUR COMPANY'S CONTROL. ACTUAL RESULTS COULD DIFFER MATERIALLY
FROM THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CHANGES IN TRENDS IN THE
ECONOMY AND ANY INDUSTRY IN WHICH THE COMPANY ENTERS, COMPETITION, THE
AVAILABILITY OF FINANCING AND OTHER FACTORS. IN LIGHT OF THESE RISKS AND
UNCERTAINTIES, THERE CAN BE NO ASSURANCE THAT THE FORWARD-LOOKING STATEMENTS
CONTAINED IN THIS FILING WILL IN FACT OCCUR.
OVERVIEW
We are a development stage company that has had no operations or income
since our inception in 1997. We were incorporated in the State of Florida on
July 10, 1997 as August Project 1 Corp. We were formed for the sole purpose of
acquiring or merging with an operating company. On January 27, 2000, Lido
Capital Corporation, a Florida corporation ("LIDO"), purchased 97.3% of the
then-outstanding common stock of our company from its controlling shareholder,
Eric Littman. As previously reported, in April 2000, we acquired by merger
USWEBAUCTIONS, INC. ("USWA"), in which our company adopted the same name. On
July 13, 2000, the acquisition was rescinded.
Since the rescission, we have been active in seeking potential operating
businesses and business opportunities with the intent to acquire or merge with
such businesses. We have been in the development stage since inception and have
undertaken limited business operations to date. As such, we are considered a
"shell" corporation, as our principal purpose is to locate and consummate a
merger or acquisition with a private entity. We have limited cash and no other
material assets. We currently do not have a source of revenue to cover operating
costs to allow us to continue as a going concern. Accordingly, our independent
accountants have included in our financial statements a going concern
qualification footnote. Further, there can be no assurance that we will have the
ability to acquire or merge with an operating business, business opportunity or
property that will be of material value to us.
Our proposed business activities classify our company as a "blank check"
company. Many states have enacted statutes, rules and regulations limiting the
sale of securities of "blank check" companies in their respective jurisdictions.
Any business combination or transaction that we may enter into will likely
result in a significant issuance of stock and substantial dilution to our
present shareholders. A business combination or transaction may result in our
shareholders losing a controlling interest in our company.
BALANCE SHEET. At September 30, 2000, we had total assets of approximately
$618,712, of which $2,349 were current assets, and had current liabilities of
approximately $62,067.
INCOME STATEMENT. We have not had any revenue since inception. Our main
operating expenses consist of the costs of complying with the reporting
requirements of the Securities Act of 1933, including legal and accounting fees.
For the quarter ended September 30, 2000, we recorded approximately $10,913 in
general and administrative expenses. These expenses were mostly offset by
interest income earned from the sale of our common stock in a private offering.
For the quarter ended September 30, 2000, our net loss was approximately $1,107.
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PLAN OF OPERATION
CASH REQUIREMENTS. Our cash requirements consist primarily of employee
salaries, rent, professional fees and related expenses. As of September 30,
2000, we had cash-on-hand of $2,349. Since inception, our cash requirements have
been met by a combination of loans from management and the sale of common stock.
In September 2000, our company raised approximately $450,000 (less offering
expenses of approximately $60,000) from the sale of 1,800,000 shares of our
company stock. We will need to raise additional capital to fund our business
operations and to develop our company's business strategy for the next twelve
months and beyond. See "Changes in Securities and Use of Proceeds." All of these
proceeds have been loaned to Lido Capital Corporation, which is owned and
controlled by Earl T. Ingarfield, the President of our company. The loan to Lido
Capital Corporation is unsecured, due on demand, and is to accrue interest at
the rate of 10% per annum. The current outstanding principal balance on this
loan is $605,977 and the accrued interest is $10,386 providing for a total
balance of principal and interest of $616,363.
Our existing cash resources, including cash loaned to related parties, are
anticipated to satisfy our cash requirements for twelve (12) months unless an
acquisition is consummated sooner. In such event, additional cash resources may
be required to fund the operations of the acquired business.
Our company intends to register these securities (approximately 1,800,000
shares of common stock) and any additional securities sold by our company with
the Securities and Exchange Commission as soon as reasonably practicable after
the consummation of a transaction with an operating company. See "Certain
Business Risk Factors - Sales of common stock by private placement investors may
cause our stock price to decline."
CHANGES IN NUMBER OF EMPLOYEES. The company does not have any employees.
We are currently reviewing our personnel needs for 2000 and beyond. As of the
date hereof, we do not anticipate hiring any employees until we consummate a
merger or acquisition with an operating business.
GOING CONCERN OPINION
Our independent auditors have added an explanatory paragraph to their
audit opinions issued in connection with the 1999 and 1998 financial statements
which states that our company does not have significant cash or other material
assets to cover its operating costs and to allow it to continue as a going
concern. Our ability to obtain additional funding will determine our ability to
continue as a going concern. Our financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
CERTAIN BUSINESS RISK FACTORS
We are subject to various risks, which may have a material adverse effect
on our company's business, financial condition and results of operations.
Certain risks are discussed below:
WE HAVE NO OPERATING HISTORY OR REVENUE FROM WHICH TO EVALUATE OUR
BUSINESS
We have had no operating history or revenue from operations since
inception. In addition, we have limited assets and financial resources. Due to
our lack of operations and revenue, we expect to incur operating losses for the
foreseeable future. Due to our lack of operations, there is limited information
upon which investors can evaluate our business. Our independent auditors have
noted that our company does not have significant cash or a source of revenue to
cover our operating costs and to allow us to continue as a going concern.
External capital will be required for us to continue as a going concern. We have
11
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no commitments or other sources of capital available to us. Our inability to
continue as a going concern could result in a decline of our stock price, and
you could lose money.
BECAUSE WE HAVE NO OPERATIONS OUR FUTURE BUSINESS OPPORTUNITIES ARE HIGHLY
SPECULATIVE
The success of our proposed plan of operation will be highly dependent on
any business opportunity which may be acquired in the future. Because we have
not identified any such business opportunity, the nature of our future business
operations, if any, will be highly speculative. There can be no assurance that
we will be successful in acquiring any business opportunity, and we cannot
predict the type of business operations any such business opportunity may
conduct. You should consider the likelihood of our future success to be highly
speculative in view of our lack of operating history, as well as a lack of any
identifiable business opportunity. Our inability to acquire an operating
business in a timely manner or at all could cause a decline in our stock price.
WE MAY NOT BE ABLE TO IDENTIFY A BUSINESS OPPORTUNITY DUE TO THE SCARCITY
OF AND COMPETITION FOR SUCH BUSINESS OPPORTUNITIES
A large number of established and well-financed entities, including
venture capital firms, are active in mergers and acquisitions of a relatively
small number of suitable business opportunities. Nearly all of these entities
have significantly greater financial resources, technical expertise and
managerial capabilities than we do and, consequently, we will be at a
competitive disadvantage in identifying possible business opportunities and
successfully completing a business combination. Additional competition for
suitable business opportunities comes from other public "shell" companies,
similar to our company. Our inability to identify and combine with a suitable
business opportunity could cause a decline in our stock price, and you could
lose money.
WE HAVE NO AGREEMENT TO ENTER INTO A BUSINESS COMBINATION OR OTHER
TRANSACTION
We have no agreement to acquire or merge with another entity, and there
can be no assurance that we will be successful in identifying and evaluating
suitable business opportunities or in consummating a business combination. If
identified, there can be no assurance that we will be able to negotiate a
business combination on terms favorable to our company. Moreover, we have not
established any criteria by which to judge a business opportunity, including a
specific length of operating history or level of earnings, assets or net worth.
Accordingly, we may enter into a business combination with a business
opportunity having no significant operating history, losses, limited or no
potential for earnings, limited assets, negative net worth, or other negative
characteristics. Any of these factors may cause a decline in our stock price,
and you could lose money.
OUR MANAGEMENT IS EXPECTED TO EXERT SIGNIFICANT INFLUENCE OVER THE
DIRECTION OF OUR COMPANY AND WILL DEVOTE A LIMITED AMOUNT OF TIME TO IDENTIFYING
BUSINESS OPPORTUNITIES
Through their stock ownership, management will be able to exert
significant influence over the direction of our company and our business
opportunities. None of our officers has entered into a written employment
agreement with our company, and none is expected to do so in the future. We do
not maintain any key man life insurance. Management is expected to devote about
ten hours per month to the present business of our company. As such,
management's ability to identify a suitable business opportunity will be
limited. Despite these factors, the loss of the services of these individuals,
particularly Earl T. Ingarfield, will jeopardize our ability to identify a
suitable business opportunity and jeopardize our ability to continue operations.
This outcome would likely cause our stock price to decline.
OUR OPERATIONS LACK DIVERSIFICATION
Our proposed operations, even if successful, will in all likelihood result
in our engaging in a business combination with a business opportunity.
Consequently, our activities may be limited to those engaged in by such a
business opportunity. Our inability to diversify our activities into a number of
areas may subject us to economic fluctuations within a particular business or
industry, which may adversely impact our operations and result in a lower stock
price.
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MANAGEMENT MAY PARTICIPATE IN BUSINESS DEALINGS WHICH COMPETE WITH OUR
COMPANY
Management may in the future participate in business dealings which
compete with the operations of our company. This may include the formation of
other public "shell" companies, in which event, management will be able to
choose which public "shell" company should acquire or merge with an identified
business opportunity. If our company acquires or merges with a business
opportunity, then management may have or develop other business dealings which
compete with the operations of such business opportunity. This may make it more
difficult for our company to identify a business opportunity or materially harm
the operations of such business opportunity. These events, if realized, may
cause our stock price to decline.
HOLDERS OF OUR STOCK SHOULD EXPECT A CHANGE IN CONTROL UPON THE
CONSUMMATION OF A BUSINESS COMBINATION, IF ANY
If we are able to consummate a business combination, we expect to be
required to issue shares of stock to the shareholders of the target business. We
believe this stock issuance may result in the shareholders of the target
business obtaining a controlling interest in our company. Any such business
combination may require our management to sell or transfer all or a portion of
its stock in our company or resign as officers and directors. This change of
control would preclude management's participation in the future affairs of our
company.
HOLDERS OF OUR STOCK WILL BE DILUTED UPON CONSUMMATION OF A BUSINESS
COMBINATION, IF ANY
Upon consummation of a business combination, if any, we expect to issue
new stock to the shareholders of the target business. This will reduce the
percentage of stock owned by our shareholders, and may result in a change of
control. In such event, if the price of our stock does not increase by a
corresponding amount, the value of the shareholders stock may decline.
TARGETS WILL BE REQUIRED TO HAVE AUDITED FINANCIAL STATEMENTS, WHICH
REQUIREMENT MAY DELAY OR PRECLUDE AN ACQUISITION OR MERGER
Any target acquisition or merger candidate of our company will become
subject to the same reporting requirements as we are upon consummation of any
merger or acquisition. Thus, in the event we successfully complete the
acquisition of or merger with an operating business, such business must provide
audited financial statements for at least the two most recent fiscal years or,
in the event the business opportunity has been in business for less than two
years, audited financial statements will be required from the period of
inception. This could limit our potential target business opportunities due to
the fact that many private business opportunities either do not have audited
financial statements or are unable to produce audited statements without undo
time and expense. One or more attractive business opportunities may choose to
forego the possibility of a business combination with our company, rather than
incur the expenses associated with preparing audited financial statements.
THERE ARE DISADVANTAGES OF A BLANK CHECK OFFERING
We may enter into a business combination with an entity that desires to
establish a public trading market for its stock. A business opportunity may
attempt to avoid what it deems to be adverse consequences of undertaking its own
public offering by seeking a business combination with us. Such consequences
include time delays of the registration process, significant expenses incurred
in such undertaking or loss of voting control to public shareholders. You should
consider these motivations in determining whether to become a shareholder in our
company.
WE MAY BE SUBJECT TO THE INVESTMENT COMPANY ACT OF 1940, WHICH WOULD
RESULT IN SIGNIFICANT REGISTRATION AND COMPLIANCE COSTS
We do not believe that our company will be subject to the Investment
Company Act of 1940 because we will not be engaged in the business of investing
or trading in securities. If we engage in business combinations in which we end
up holding passive investment interests in a number of entities, we could be
subject to regulation under the Investment Company Act of 1940. In such event,
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we would be required to register as an investment company and could be expected
to incur significant registration and compliance costs.
SALE OF COMMON STOCK BY PRIVATE PLACEMENT INVESTORS MAY CAUSE OUR STOCK
PRICE TO DECLINE
We intend to file a registration statement on behalf of certain
shareholders with the Securities and Exchange Commission as soon as reasonably
practicable after the consummation of a transaction with an operating company.
This registration statement will permit such shareholders to freely sell their
shares of common stock into the open market. Such sales without corresponding
demand may cause our stock price to decline.
OUR COMMON STOCK MAY BE DEEMED TO BE "PENNY STOCK"
Our common stock may be deemed to be "penny stock" as that term is defined
in Rule 3a51-1 promulgated under the Securities Exchange Act of 1934. Penny
stocks are stock:
o With a price of less than $5.00 per share;
o That are not traded on a "recognized" national exchange;
o Whose prices are not quoted on the Nasdaq automated quotation system
(Nasdaq listed stock must still have a price of not less than $5.00
per share); or
o In issuers with net tangible assets less than $2.0 million (if the
issuer has been in continuous operation for at least three years) or
$5.0 million (if in continuous operation for less than three years),
or with average revenues of less than $6.0 million for the last
three years.
Broker/dealers dealing in penny stocks are required to provide potential
investors with a document disclosing the risks of penny stocks. Moreover,
broker/dealers are required to determine whether an investment in a penny stock
is a suitable investment for a prospective investor. These requirements may
reduce the potential market for our common stock by reducing the number of
potential investors. This may make it more difficult for investors in our common
stock to resell shares to third parties or to otherwise dispose of them. This
could cause our stock price to decline.
PART II
OTHER INFORMATION.
ITEM 1. LEGAL PROCEEDINGS.
We are not aware of any legal proceedings involving our company.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
(a), (b) and (d) None.
(c) SALES OF UNREGISTERED SECURITIES.
In the quarter ended September 30, 2000, our company sold 1,800,000 shares
of our common stock at a price of $0.25 per share for cash of approximately
$450,000. All of these shares were purchased by unrelated parties.
With respect to the sale of unregistered securities referenced above,
these transactions were exempt from registration pursuant to Section 4(2) of the
Securities Act of 1933, and Regulation D promulgated thereunder. In each
instance, the purchaser had access to sufficient information regarding our
company so as to make an informed investment decision.
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<PAGE>
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 5. OTHER INFORMATION.
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(A) EXHIBITS.
EXHIBIT
NO. DESCRIPTION LOCATION
--- ----------- --------
2.01 Stock Purchase Agreement dated Incorporated by reference to
as of January 27, 2000 among our Exhibit 2.01 to our company's
company, Lido Capital Registration Statement on Form
Corporation, Eric P. Littman and 10-SB filed with the Securities
Dennis Sturm and Exchange Commission on
February 24, 2000.
2.02 Stock Purchase Agreement dated Incorporated by reference to
as of April 10, 2000, among our Exhibit 2.02 to our company's
company, USWEBAUCTIONS, Inc., Current Report on Form 8-K filed
Jon Kochevar, and John Allen with the Securities and Exchange
Commission on May 26, 2000.
2.03 Articles of Merger dated as of Incorporated by reference to
April 21, 2000 of USWEBAUCTIONS, Exhibit 2.03 to our company's
Inc. into our company, together quarterly report on Form 10-QSB
with the Plan of Merger filed with the Securities and
Exchange Commission on August 21,
2000.
2.04 Rescission Agreement and Mutual Incorporated by reference to
Release dated as of July 13, Exhibit 2.01 to our company's
2000 among our company, Jon Current Report on Form 8-K filed
Kochevar, and John Allen with the Securities and Exchange
Commission.
3.01 Articles of Incorporation filed Incorporated by reference to
on July 10, 1997 with the Exhibit 3.01 to our company's
Florida Secretary of State Registration Statement on Form
10-SB filed with the Securities
and Exchange Commission on
February 24, 2000.
3.02 Articles of Amendment to Incorporated by reference to
Articles of Incorporation Exhibit 3.02 to our company's
Registration Statement on Form 10-SB
filed with the Securities and
Exchange Commission on February 24,
2000.
3.03 Bylaws Incorporated by reference to
Exhibit 3.03 to our company's
Registration Statement on Form
10-SB filed with the Securities
and Exchange Commission on
February 24, 2000.
4.01 Instruments defining the rights Not applicable.
of holders, incl. indentures
10.01 Material Contracts. Not Applicable.
11.01 Statement re: Computation of Not Applicable.
Earnings
15
<PAGE>
EXHIBIT
NO. DESCRIPTION LOCATION
--- ----------- --------
15.01 Letter on Unaudited Interim Not Applicable.
Financial Information
16.01 Letter on Change in Certifying Not Applicable.
Accountant
18.01 Letter on Change in Accounting Not Applicable.
Principles
21.01 Subsidiaries of our company Not Applicable.
23.01 Consent of Independent Not Applicable.
Accountants
24.01 Power of Attorney Not Applicable.
27.01 Financial Data Schedule Provided herewith.
(B) REPORTS ON FORM 8-K.
No reports on Form 8-K were filed during the quarterly period ended
September 30, 2000.
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<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: November 14, 2000 USWEBAUCTIONS, INC.
By: /s/ Earl T. Ingarfield
----------------------------------
Earl T. Ingarfield, President
17
